Protect Your Cleantech - IP May Play A Role In Determining Who Leads The Pack

With Vancouver named one of the top 10, "New Silicon Valleys" of the clean tech industry, worldwide that is, the role of innovation and the associated pitfalls is on my mind these days. Burnaby based, Ballard Power Systems may be said to have pioneered the fuel cell industry and ex employees are busily creating new companies and uses for the technology.

In the midst of all of this activity certain essential tasks associated with successful innovation can be overlooked. In any rapidly evolving industry, inevitably innovation will overlap and application of existing technologies will tend to be "discovered" by several, if not many different companies. So, it is in cleantech.

That activity that will play such an important role in the ultimate success of a clean technology product turns out to be protection of intellectual capital.

I've written before about the importance of intellectual property protection. A post Mass High Tech.com, Energy, Clean Tech and IP: Protecting Innovation, speaks specifically to the challenges firms in the cleantech industry face.

While an important component to any technology-based company's success, intellectual property is especially important for "clean tech" ventures encompassing energy or environmentally related technologies.

For clean tech companies, it's important to note that investors consider strong IP essential for both first to market companies and those that follow (to protect a key technology for later market entry or licensing/acquisition.)

Cleantech is, of course, an umbrella term that encompasses a wide variety of technologies and spans a variety of different industries. The rationale for application of intellectual property protection therefore varies by industry. Does it promote investor confidence? Is it important as a defensive strategy? Can it be used to encourage licensing down the road?

Clearly, whether or not the reason is immediately obvious, innovators in the space need to take steps early on to protect technological innovation and continue to revisit the applicability of those technologies as the company grows and the discovers new uses for existing patented processes.

Similarly, don't dismiss patent protection for clean tech ventures with a long time-frame to market or long technology lifespan. Strategic patent filing approaches may be available in some jurisdictions, increasing patent enforcement life, for example, until the effort reaches a certain state of commercial viability. It's also possible to file initial applications relating to core aspects of the technology, then stagger subsequent filings for incremental changes.

Like the early days of the dotcom boom, intellectual property protection will play a big role in who turns out to be the winners and the losers in cleantech. Those companies which use forethought and innovative thinking, in every aspect of their business, including legal protection, will be much better positioned to be on the winning end. As new uses for the current technology, as well as, new applications for technologies currently in development arise, appropriate intellectual property protection will be key.

I know I sound like an advertisement for the legal profession, but in an industry highly dependent on break through innovation, the appropriate IP may be the deciding point between leadership and second place.

Innovation Going Green - B.C. Government Helps

By now, those of us involved in innovation, no wait, everyone, whether involved in innovation or not, knows that green inventions are the hottest new thing. It seems that the Canadian Government knows too... at least in B.C.

As I've written about before:

Canadian companies are very reliant on the Natural Resource Sector - the drill it, mine it, chop it mentality.

So, it's not terribly surprising that this government effort is focused on energy. The B.C. plan offers a 30% tax credit to early-stage investors in companies engaged in the research and development, commercialization and/or manufacture and processing of clean technologies in British Columbia and employing B.C. workers.

"Innovative clean technology reducing GHG emissions will play a key role in helping to grow B.C.'s green economy," said Technology, Trade and Economic Development Minister Ida Chong today. "The tax credits will lever up to as much as $25 million annually in venture capital to support clean tech companies that can offer exciting employment and investment opportunities to British Columbians."

The goal is, obviously to get on the cleantech bandwagon. Moving from old line energy producing industries makes sense as a diversified economy is in the best situation to ward of the impact of the possibility of unemployment driven by the almost certain recession soon to come.

British Columbia is already home to the third largest Cleantech cluster in the world, growing at an annual rate of 11% a year. Naikun Wind Energy Group Inc., which plans a wind farm off the coast of British Columbia, had one of the best ROI in Canada in the cleantech field.

Companies in British Columbia conduct research and development in a variety of fields including: transportation, energy efficiency, wastewater clean air and fuel cell development. More are in early stage development or searching for investment capital.

And, with the increased interest in green, that is sure to continue.

There are now close to 100 cleantech companies listed ion the TSX Venture Exchange, (The TSX Venture Exchange is Canada's public venture capital marketplace for emerging companies). Market value of these companies is more than $13 billion. But hard times could be coming.

The creaky economy and the booming successes in 2007 has led to a slump in 2008 in the TSX Venture Exchange. Entrepreneurs and established companies are struggling to maintain the growth rate enjoyed over the last few years. Investors are leery of banking on new technology in an era when consumers and businesses are hunkering down and payouts may be years in the coming.

Will this tax incentive make a difference?

We think it will. As evidenced by the Abenga Solar case in the U.S. tax credits can make a big difference. Without tax credits, a clear sign of support from the government, funding for risky, new technology projects can easily fail.

In an already tight credit environment, tax credits can make the difference between private funding of a project or not. Investors clearly see the benefits of investing in a field supported by those government entities charged with economic growth.